Oct. 29, 2023
I am submitting public comment on the proposed rule "Safeguarding Advisory Client Assets." I appreciate the Commission's goal of strengthening investor protections, but have concerns the proposed rule does not sufficiently address the unique characteristics of the digital asset space. The proposal lacks clear definitions for key digital assets terms like "wallet" and "validator." Without precise, industry-aligned meanings, compliance uncertainty and inconsistent interpretation will result. I urge the SEC to provide explicit definitions aligned with common digital asset usage. Additionally, the proposed custody requirements do not account for the decentralized nature and complexity of digital assets. Mandating centralized control is impractical, given the use of distributed ledgers within the ecosystem. More adaptive frameworks are needed that recognize these technological realities, while safeguarding investors. Further, overly burdensome rules could hinder innovation in decentralized finance (DeFi) and constrain the responsible growth of digital assets. I urge striking the right balance between protection and encouraging advancement. The Commission should collaborate with experts to develop pragmatic guidelines specifically tailored to the digital asset environment. Finally, stifling digital asset technologies through improper regulation could further limit financial inclusion and access to promising financial products in the United States and globally. It is vital we create space for continued responsible innovation, allowing all communities to participate in our collective financial future. In summary, I ask that the Commission take a balanced, nuanced approach to regulating digital asset custody. Recognizing the distinct attributes of digital assets will lead to effective policy that benefits investors and supports progress. Thank you for accepting my input.